Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience)

Edori Iniviei Simeon; Edori Daniel Simeon; Needam Best Baridam

doi:doi:10.11648/j.jwer.20160506.12

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Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience)

Edori Iniviei Simeon, Edori Daniel Simeon, Needam Best Baridam

Published in Journal of World Economic Research (Volume 5, Issue 6)

Received: 9 June 2016 Accepted: 17 June 2016 Published: 24 February 2017

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Abstract

This paper set out to empirical investigate the relationship between financial intermediation and economic growth in Nigeria using time series data spanning from 1986 to 2014. The output of our empirical analysis reflect that all the data used in the process of research are stationary after first differencing in the order of 1 (1), the output of the OLS shows that M2 and IIR has a positive and significant influence on the growth of the Nigeria economy while other variable are negatively significant. Mine while, the result of the granger causality test shows that there exist a causality flow between RGDP, IIR and, PSC with causality flowing from RGDP to financial Intermediation indicators (IRR and PSC) respectively. Judging by the output of this research, it show that in the Nigeria context, economic growth determine financial sector development. This suggest that financial Intermediation activities in Nigeria is demand following while the economy is leading. The economic implication of this is that the financial sectors out-rightly rely on the growth of the economy.

Published in	Journal of World Economic Research (Volume 5, Issue 6)
DOI	10.11648/j.jwer.20160506.12
Page(s)	101-107
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Financial Intermediation Ratio, Granger Causality, Economic Growth

References

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[2]	Bencivenga, V. R. and Smith, B. D. (1991) "Financial Intermediation and Endogenous Growth, RCER Working Papers 24, University of Rochester- Center for Economic Research.
[3]	Bernanke, B. and A. Blinder (1988): “Credit, money, and aggregate demand”, American Economic Review, 78, (2), Papers and Proceedings of the One-Hundredth Annual Meeting of the American Economic Association, May, 435, (39).
[4]	Demiguc-Kunt, A. and Levine, R. (1996). "Stock Market Development and Financial Intermediaries: Stylized Facts, World Bank Economic Review.
[5]	Goodfriend, M. and B. McCallum (2007): “Banking and interest rates in monetary policy analysis: A quantitative exploration”, NBER Working Papers, no 13207, June.
[6]	Levine, R. and Zervos, S., (1996). Stock Market Development and Long-run Growth‖, Policy Research Working Paper 1582, World Bank Economic Review, 10, 323-339. http://www.worldbank.org/fandd
[7]	Levine, R., Loayza, N. and Beck, T., 2000. “Financial Intermediation and Growth, Causality and Causes”. Journal of Monetary Economics, (46) 31-75.
[8]	Mckinnon, R., 1973. Money and Capital in Economic Development. The Brookings Institute, Washington.
[9]	Monogbe, T. G (2015). Impact of insurance sector development and the growth of the Nigeria economy: International Journal of Advanced Academic Research - Social Sciences and Education \| 1 (2), Nov.2015 \| www.ijaar.org
[10]	Monogbe et al, (2016): financial development and economic performance in Nigeria. journal of business and Africa economy.
[11]	Nwaeze. C, Michael. O and Nwabekee. C. financial intermediation and economic growth in Nigeria (1992-2011). The Macrotheme Review 3 (6), summer 2014.
[12]	Robbinson, J., 1952. “The Generalization of the General Theory” in the Rate of Interest and Other Essays. London: Macmillan, (67) 146.
[13]	Rousseau and Wachtel (2000) ―Equity Markets and Growth: Cross-country Evidence on Timingand Outcomes, 1980-1995. Journal of Banking and Finance, 24, 1933 -1957.
[14]	Shittu Ayodele (2012), financial intermediation and economic growth in Nigeria British Journal of Arts and Social Sciences ISSN: 2046-9578, 4, (2). (2012) ©British Journal Publishing, Inc. 2012 http://www.bjournal.co.uk/BJASS.aspx

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Edori Iniviei Simeon, Edori Daniel Simeon, Needam Best Baridam. (2017). Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience). Journal of World Economic Research, 5(6), 101-107. https://doi.org/10.11648/j.jwer.20160506.12

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ACS Style

Edori Iniviei Simeon; Edori Daniel Simeon; Needam Best Baridam. Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience). J. World Econ. Res. 2017, 5(6), 101-107. doi: 10.11648/j.jwer.20160506.12

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AMA Style

Edori Iniviei Simeon, Edori Daniel Simeon, Needam Best Baridam. Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience). J World Econ Res. 2017;5(6):101-107. doi: 10.11648/j.jwer.20160506.12

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@article{10.11648/j.jwer.20160506.12,
  author = {Edori Iniviei Simeon and Edori Daniel Simeon and Needam Best Baridam},
  title = {Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience)},
  journal = {Journal of World Economic Research},
  volume = {5},
  number = {6},
  pages = {101-107},
  doi = {10.11648/j.jwer.20160506.12},
  url = {https://doi.org/10.11648/j.jwer.20160506.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20160506.12},
  abstract = {This paper set out to empirical investigate the relationship between financial intermediation and economic growth in Nigeria using time series data spanning from 1986 to 2014. The output of our empirical analysis reflect that all the data used in the process of research are stationary after first differencing in the order of 1 (1), the output of the OLS shows that M2 and IIR has a positive and significant influence on the growth of the Nigeria economy while other variable are negatively significant. Mine while, the result of the granger causality test shows that there exist a causality flow between RGDP, IIR and, PSC with causality flowing from RGDP to financial Intermediation indicators (IRR and PSC) respectively. Judging by the output of this research, it show that in the Nigeria context, economic growth determine financial sector development. This suggest that financial Intermediation activities in Nigeria is demand following while the economy is leading. The economic implication of this is that the financial sectors out-rightly rely on the growth of the economy.},
 year = {2017}
}

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TY  - JOUR
T1  - Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience)
AU  - Edori Iniviei Simeon
AU  - Edori Daniel Simeon
AU  - Needam Best Baridam
Y1  - 2017/02/24
PY  - 2017
N1  - https://doi.org/10.11648/j.jwer.20160506.12
DO  - 10.11648/j.jwer.20160506.12
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 101
EP  - 107
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20160506.12
AB  - This paper set out to empirical investigate the relationship between financial intermediation and economic growth in Nigeria using time series data spanning from 1986 to 2014. The output of our empirical analysis reflect that all the data used in the process of research are stationary after first differencing in the order of 1 (1), the output of the OLS shows that M2 and IIR has a positive and significant influence on the growth of the Nigeria economy while other variable are negatively significant. Mine while, the result of the granger causality test shows that there exist a causality flow between RGDP, IIR and, PSC with causality flowing from RGDP to financial Intermediation indicators (IRR and PSC) respectively. Judging by the output of this research, it show that in the Nigeria context, economic growth determine financial sector development. This suggest that financial Intermediation activities in Nigeria is demand following while the economy is leading. The economic implication of this is that the financial sectors out-rightly rely on the growth of the economy.
VL  - 5
IS  - 6
ER  -

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Author Information

Edori Iniviei Simeon

Department of Finance and Banking, Faculty of Management Science, University of Port Harcourt, Port Harcourt,Nigeria
Edori Daniel Simeon

Department of Accountancy, University of Science and Technology, Port Harcourt, Nigeria
Needam Best Baridam

Department of Accountancy, University of Science and Technology, Port Harcourt, Nigeria

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Plain Text BibTeX RIS

APA Style

Edori Iniviei Simeon, Edori Daniel Simeon, Needam Best Baridam. (2017). Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience). Journal of World Economic Research, 5(6), 101-107. https://doi.org/10.11648/j.jwer.20160506.12

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ACS Style

Edori Iniviei Simeon; Edori Daniel Simeon; Needam Best Baridam. Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience). J. World Econ. Res. 2017, 5(6), 101-107. doi: 10.11648/j.jwer.20160506.12

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AMA Style

Edori Iniviei Simeon, Edori Daniel Simeon, Needam Best Baridam. Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience). J World Econ Res. 2017;5(6):101-107. doi: 10.11648/j.jwer.20160506.12

Copy | Download

@article{10.11648/j.jwer.20160506.12,
  author = {Edori Iniviei Simeon and Edori Daniel Simeon and Needam Best Baridam},
  title = {Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience)},
  journal = {Journal of World Economic Research},
  volume = {5},
  number = {6},
  pages = {101-107},
  doi = {10.11648/j.jwer.20160506.12},
  url = {https://doi.org/10.11648/j.jwer.20160506.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jwer.20160506.12},
  abstract = {This paper set out to empirical investigate the relationship between financial intermediation and economic growth in Nigeria using time series data spanning from 1986 to 2014. The output of our empirical analysis reflect that all the data used in the process of research are stationary after first differencing in the order of 1 (1), the output of the OLS shows that M2 and IIR has a positive and significant influence on the growth of the Nigeria economy while other variable are negatively significant. Mine while, the result of the granger causality test shows that there exist a causality flow between RGDP, IIR and, PSC with causality flowing from RGDP to financial Intermediation indicators (IRR and PSC) respectively. Judging by the output of this research, it show that in the Nigeria context, economic growth determine financial sector development. This suggest that financial Intermediation activities in Nigeria is demand following while the economy is leading. The economic implication of this is that the financial sectors out-rightly rely on the growth of the economy.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - Financial Intermediation and Economic Growth in Nigeria: Long Run Analysis and Test of Demand Following Hypothesis (Nigerian Experience)
AU  - Edori Iniviei Simeon
AU  - Edori Daniel Simeon
AU  - Needam Best Baridam
Y1  - 2017/02/24
PY  - 2017
N1  - https://doi.org/10.11648/j.jwer.20160506.12
DO  - 10.11648/j.jwer.20160506.12
T2  - Journal of World Economic Research
JF  - Journal of World Economic Research
JO  - Journal of World Economic Research
SP  - 101
EP  - 107
PB  - Science Publishing Group
SN  - 2328-7748
UR  - https://doi.org/10.11648/j.jwer.20160506.12
AB  - This paper set out to empirical investigate the relationship between financial intermediation and economic growth in Nigeria using time series data spanning from 1986 to 2014. The output of our empirical analysis reflect that all the data used in the process of research are stationary after first differencing in the order of 1 (1), the output of the OLS shows that M2 and IIR has a positive and significant influence on the growth of the Nigeria economy while other variable are negatively significant. Mine while, the result of the granger causality test shows that there exist a causality flow between RGDP, IIR and, PSC with causality flowing from RGDP to financial Intermediation indicators (IRR and PSC) respectively. Judging by the output of this research, it show that in the Nigeria context, economic growth determine financial sector development. This suggest that financial Intermediation activities in Nigeria is demand following while the economy is leading. The economic implication of this is that the financial sectors out-rightly rely on the growth of the economy.
VL  - 5
IS  - 6
ER  -

Copy | Download